* CFTC proposes energy trader position limits
* U.S. retail sales down, jobless claims up
(Recasts, updates late trading in light of CFTC reaction in
paragraph 2)
By Edward McAllister
NEW YORK, Jan 14 (Reuters) - Oil prices fell marginally on
Thursday, as weak U.S. economic data and high inventories
spurred fears of a sluggish rebound in demand in the world's
largest energy consumer.
In late trading, prices briefly edged up as some traders
said U.S. regulatory proposals on position limits were not as
strict as they had feared. But the gains evaporated and oil
closed lower.
U.S. crude for February delivery <CLc1> fell 26 cents to
settle at $79.39 a barrel in volatile trade as February crude
options expired. An option gives an investor the right but not
the obligation to buy or sell crude at a fixed price, which can
add to volatility ahead of option expiration.
In London, Brent crude for February <LC0c1>, which expired
on Thursday, fell 49 cents to settle at $77.82 a barrel.
"Crude futures are down in follow-through selling after
yesterday's EIA data showed very large builds in petroleum
inventories. Data on retail sales have been disappointing
also," said Brad Samples, analyst at Summit Energy, Louisville,
Kentucky
U.S. retail sales fell 0.3 percent last month, the first
decline in three months, according to the Commerce Department,
while Labor Department data showed more people sought jobless
benefits last week. []
The Commodity Futures Trading Commission moved to limit the
role of big traders in energy markets, unveiling proposals to
put a hard cap on the size of positions that dealers can hold,
but offering a limited exemption for big financial hedgers.
[]
The long-awaited proposals will apply to the four
most-traded energy contracts on the two major exchanges.
It remains to be seen if the limits -- which CFTC said
would affect only the 10 biggest position holders if
implemented immediately -- are sufficient to satisfy Congress
members who have clamored for regulatory action since oil
prices surged to a record $147 in 2008.
Crude prices briefly rose into the positive after the
release.
"The energy markets are breathing a sigh of relief that the
CFTC proposals on position limits do not seem as bad as
feared," said Phil Flynn, analyst at PFGBest Research in
Chicago.
"It looks like the CFTC has backed off from its tough talk
earlier and now appears to have a lot of room to grant
exemptions."
U.S. crude oil stocks rose by a larger-than-expected 3.7
million barrels last week, Energy Information Administration
data showed on Wednesday. And while heating oil stocks fell by
1.1 million barrels, stocks for the broader category known as
distillates still rose by 1.4 million barrels. []
U.S. economic activity is now at a low level but is showing
signs of modest improvement, the Federal Reserve said on
Wednesday in remarks seen as reinforcing the prevailing view
that oil demand will grow in 2010. []
Early this month, oil prices rallied to 15-month highs near
$84 a barrel as freezing weather across much of the Northern
Hemisphere boosted heating demand. Prices then fell, partly on
a surprise jump in U.S. distillate stocks, including heating
oil, and a rise in crude oil inventories.
(Additional reporting by Gene Ramos and Robert Gibbons in New
York, Emma Farge in London, and Alejandro Barbajosa in
Singapore; Editing by David Gregorio)
